Quick Read
I keep hitting the buy button on Salesforce (NYSE:CRM) and I am not sorry about it. The stock is down 38.06% year to date and down 39.45% over the last year, and every red day makes me want to add more. Wall Street has decided that single-digit growth in the legacy Sales and Service clouds is the whole story. I think Wall Street is staring at the wrong dashboard.
Cherdchai101 / Shutterstock.com What Keeps Pulling Me Back
The reason I keep buying is simple. Salesforce quietly turned itself into the plumbing for enterprise agentic AI, and the numbers finally show it. Agentforce ARR hit $1.2 billion, up 205% year over year, and Agentforce plus Data 360 combined ARR reached roughly $3.40 billion, up 200%. Customers delivered 3.8 billion Agentic Work Units, up 111% quarter over quarter, and more than half of Agentforce and Data 360 bookings came from existing customers. Marc Benioff summed it up on the call: “Salesforce has never been more essential.” I believe him because the pipeline data agrees.
Three Reasons the Thesis Holds
First, valuation. I am buying a business at a trailing P/E of 18 and a forward P/E of 12, with a free cash flow yield near 10.77% and a PEG of 0.747. That is a software utility priced like a cyclical.
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Second, the cash machine keeps compounding. FY26 free cash flow came in at $14.40 billion, gross margins run around 77%, and non-GAAP operating margin is guided to 34.3%. Management is using that cash the way I want them to. A $25 billion accelerated share repurchase knocked the share count from 970 million to 871 million in a single year, and a new $50 billion repurchase authorization sits behind it. Jim Cramer flagged it on Mad Money: “Salesforce is fighting back too. With a $50 billion buyback and half of that being done on accelerated repurchase basis.”
Story Continues
Third, the earnings pattern. Q1 FY27 posted EPS of $3.88 against a $3.1271 estimate, the fifth consecutive EPS beat, on revenue of $11.133 billion, up 13.27%. Forward visibility is stacked: current RPO of $33.6 billion, up 14%, on top of roughly $72 billion in total remaining performance obligations.
The Risk I Refuse to Wave Off
The real risk is the one Wall Street keeps circling. Core subscription growth has settled into the single digits, and to fund the buyback Salesforce loaded up: noncurrent debt climbed from $10.4 billion to $39.3 billion. If Agentforce monetization stalls, that debt turns from fuel to friction. Retail sees it too. One r/investing post with 278 upvotes argued Salesforce is “down a third this year on AI disruption fears”. I take the concern seriously. I still buy, because interest coverage sits at 27.5x, the Platform and Other segment grew 25%, and Public Sector Cloud ARR crossed $2 billion, up 23%. Those are the tells of a moat widening.
Why the Buy Button Stays Active
Management raised FY27 revenue guidance to $45.90 billion to $46.20 billion and lifted the FY30 revenue target to $63 billion. The analyst target price of $246.80 tells me the professional crowd already knows the math, even while the stock does not. When a 77% gross margin cloud utility trades at a free cash flow yield you would expect from a pipeline company, and it happens to own the leading agentic CRM, I am going to keep pressing buy until the market notices.
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